UPDATED 14:07 EDT / JULY 09 2020

CLOUD

Rise of FinOps: LiveRamp exec reins in cloud costs by melding finance and developers

The promise of cloud in the enterprise is all about speed and efficiency. Is it also about saving money?

The market research firm 451 Research, which tracks cloud pricing on a quarterly basis, found that the number of line items offered for purchase by the five largest cloud providers doubled in 2019 and now exceeds 2 million products. With many large organizations seeking to take full advantage of those services, costs can mushroom dramatically.

That has led to the rise of FinOps, a movement to break down the barriers between development/engineering and finance. It’s a recognition that moving to the cloud means more for companies than becoming data smart and agile. Successful cloud implementation requires a combination of systems, best practices and culture to provide a truly effective operating model. Anything less could quickly become very expensive.

“You discover you’ve gone from quarterly planning cycles where you opt to purchase a whole rack of servers and you implement them over the next quarter, to making by-the-second decisions to spin up resources via command line by developer and spend limitless operating expenses,” said Sasha Kipervarg (pictured), head of global cloud operations and special projects at LiveRamp Inc. “There’s some financial pain that gets expressed. It’s quite a big shift and I think some companies are caught flat-footed by it.”

Kipervarg spoke with Stu Miniman, host of theCUBE, SiliconANGLE Media’s livestreaming studio, in the latest installment of Cloud Native Insights, a series that focuses on transitions in the marketplace and how companies are making the journey to modernize and leverage cloud native technologies. They discussed LiveRamp’s own transition to the cloud, concern around new costs generated by the move, building a bridge of understanding with developers and the cultural shift as a growing list of companies embrace the FinOps movement.

Outage forces move to cloud

LiveRamp, a data connectivity platform, encountered its own forcing function in shifting company operations to the cloud. The firm had been considering various migration proposals over the course of several years yet had not fully embarked on its own cloud journey.

Then the temperatures in San Francisco, where the firm’s large data center was located, soared well into the 90s over an extended period and the situation changed significantly.

“What really pushed us over the edge was we had a three- to four-day outage at our data center in San Francisco during a heat wave,” Kipervarg recalled. “We had racks of servers going down because it was too hot. If we weren’t quite convinced before that, we certainly were after that, it made us realize there were lots of good reasons to be in the cloud.”

Over the course of a year, LiveRamp migrated to Google Cloud Platform. Customer facing applications were containerized, with a switch from on-premises to native database services in GCP.

“The applications themselves did not change, but they swapped out their underlying infrastructure for containers running on the GCP native container service,” Kipervarg explained. “On the back end, we used native service in GCP as much as possible.”

Accelerated charges

The migration was technically quite successful, according to Kipervarg, and his company had now protected itself against unseasonably warm weather or other aberrations that could disrupt operations. But he also noticed that collaboration between engineering leadership, developers and finance to review spending and costs on a quarterly basis were out of step with a new reality where developers were incurring charges on a minute-by-minute basis.

“When you move to the cloud, all of a sudden that decision needs to happen on a real-time basis and typically companies are not set up for that kind of a conversation,” Kipervarg said. “We think of the migrations and we only think about their technical success. If you migrate to the cloud and you do it technically and you containerize and it’s on schedule, but then you blow your budget, was it really a success?”

This question goes to the heart of FinOps, which expanded out of a “DevSecOps” talk by J.R. Storment, co-founder of Cloudability Inc., during an AWS Public Sector Summit in 2016. Storment’s view was that DevOps in the cloud essentially broke procurement, shifting control of company purse strings to developers who made critical financial decisions on which cloud providers to use.

“Developers spend money by API,” Kipervarg said. “You need to have a real-time conversation where they can make tradeoffs and you can track the budget. Those expenses shift from ‘capex’ to ‘opex’ and that’s treated in a very different way on the books.”

Focus on efficiency

APIs, speed, agility, apps and coding are all part of the terminology familiar to developers. Tradeoffs? Not so much.

The challenge for leaders of the FinOps movement was to create an understanding among developers of how cost-effective DevOps could make the end product better as well. The key was efficiency.

“They care about CPU efficiency, they care about RAM efficiency and they care about how efficient their application is from a cost perspective too,” Kipervarg said. “If they understand how efficient their application is, they have a natural instinct to want to make it better on a daily or weekly basis, it’s baked deep into their engineering persona. We try to harness that.”

In an interview with theCUBE in 2019, Storment described how chief financial offers were beginning to examine cloud spending more closely because it had become the fastest-growing cost-of-goods-sold expense. FinOps represents an opportunity to break down the cost of application development with a focus on the unit economics around cloud spending.

“It’s an opportunity for developers to understand their cost efficiency, deploy in the cloud by API and do it in a fully responsible way,” Kipervarg said. “There is a higher goal here and this is the goal of unit economics. It’s figuring out precisely what your application actually costs, being deployed and used by the consumer on a unit basis.”

Like the cloud itself, FinOps has become something of a growth industry. The FinOps Foundation was launched in February of 2019 with 30 members. Three months later, when it introduced new partner tiers for cloud service providers and vendors, it had grown to 300 participants.

Late last month, the group announced that it would join the Linux Foundation which also hosts the influential Cloud Native Computing Foundation. The FinOps nonprofit currently lists over 1,500 members.

The rapid membership growth of the FinOps Foundation points to an important cultural shift in today’s enterprise. Developers are becoming more aware of how their decisions affect cost and the future success of the business.

“The cultural shift that FinOps emphasizes is key,” Kipervarg said. “It’s helping developers get the high-level understanding of why we’re doing what we’re doing and why it’s important. FinOps has helped us, it’s helped lots of other companies.”

Here’s the complete video interview, the latest in the continuing Cloud Native Insights series and one of many CUBE Conversations from SiliconANGLE and theCUBE:

Photo: SiliconANGLE

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